Consumer Sentiment Takes A Dive

Just when you think you've gotten through the week, consumer sentiment dives and, perhaps, tips the balance against a rate hike. The mid-month September flash for the consumer sentiment index is down more than 6 points to 85.7 which is below Econoday's low-end forecast. The index is now at its lowest point since September last year. Weakness is centered in the expectations component which is down more than 7 points to 76.4, also the lowest reading since last September. Weakness in this component points to a downgrade for the outlook on jobs and income. The current conditions component also fell, down nearly 5 points to 100.3 for its weakest reading since October. Weakness here points to weakness for September consumer spending. Inflation readings are quiet but did tick 1 tenth higher for both the 1-year outlook, at 2.9 percent, and the 5-year, at 2.8 percent. New York Fed President William Dudley himself has said he is focused on this report as an early indication of how U.S. consumers are responding to Chinese-based market turbulence. These results offer a rallying cry for the doves at next week's FOMC meeting.

Recent History Of This Indicator: The markets may be sliding but forecasters aren't predicting a major impact on consumer sentiment which is expected to edge lower, to 91.0 for the September flash vs 91.9 in August. It was roughly a 91 pace that the index posted in the last two weeks of August, down from a 93 pace in the first half of August and through July. The ongoing decline in sentiment isn't that great, evidence that the U.S. consumer does in fact feel insulated from global events.